The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
CAPITAL MARKETS

Equity analysis: Research revolution continues as roles keep changing

About a third of sell-side analysts could lose their jobs over the next two years as fund managers do more of their own research and independent providers gain market share.

Buy-side firms are expected to cut the amount of money they allocate to brokerage research by 24% over the next two years, according to a recent report by financial services consultancy Tabb Group.

The amount spent on brokerage research by buy-side firms in the US and the UK is expected to fall from $5.6 billion in 2006 to $4.25 billion in 2008. Spending on independent research in the same period, by contrast, is expected to rise from $1.49 billion to $1.78 billion.

Hard hit

The massive fall in revenues will hit investment banks’ research departments hard.

“We estimate that the number of sell-side analysts, roughly 16,200 in 2000, and currently about 9,300, will fall to 6,000 by 2008,” says Jeromee Johnson, a senior analyst at Tabb and author of the report. “Over the next two years the equity research business model will drastically change as buy-side and independent research firms will take over from sell-side firms in the majority of research production.”

Number-crunching In decline
Estimate of sell-side analysts in the US and UK
Source: Tabb Group

Research budgets at investment banks are also being hurt by the decline in overall commission rates and by a growing trend among buy-side firms to direct agency portfolio trades to brokers as compensation for equity research.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree